Earthquake Insurance New Zealand

New Zealand is a small country with a high earthquake risk - well not so much a risk as a certainty. Perhaps fortunately early settlement was highly disrupted by major earthquakes -  Wellington was hit by major quakes in 1848, 1855 and 1942.

All this seismic activity was not all a bad thing though. As a result of the 1848 quake which flattened the city - the city was rebuilt in wood - which meant it survived relatively intact in the much larger quake seven years later. The 1855 quake also added significant flatland to what is now the CBD and the airport. The 1942 earthquake was directly responsible for the creation - in 1944 of the Earthquake and War Damages Commission (now the Earthquake Commission (EQC)) which to this date is the country's insurer for earthquakes and other natural disaster.

How Do I get Earthquake Insurance in New Zealand?

Simple - but non-intuitive - you make sure you have house and/or contents insurance. If you have a mortgage you are almost certainly insured (at your bank's insistence), if you have significant possessions but are renting it would be wise to have contents insurance. If you have either of these insurances you have automatic cover of up to $100,000 for replacement of your house and/or possessions. If you have private insurance then your total replacement value will be covered. For $100,000 you won't get much of a house - but it would cover a fairly large household's contents.

EQC covers you if your property is damaged or destroyed due to landslides, tsunamis, volcanic eruption and hydrothermal activity - as well as earthquakes. You are also covered for fire or flood damage as a consequence of the natural disasters listed.

EQC will not however cover cars and vehicles. Most car insurance policies will cover natural disasters - but check your policy wording, this coverage is also part of third party fire and theft policies. In New Zealand however there is no legal requirement to insure vehicles so after a major quake its highly likely that many, particularly older and lower-value vehicles, will be uninsured.

Does My Travel Insurance Cover Me?

If you are a visitor to New Zealand and get caught in the "big one" - or even a minor one - you may well have to claim on your travel insurance for losses such as travel delays, loss of luggage, missed transport connections and similar. Note that if you are injuried because of an earthquake or similar you are covered anyway under New Zealand's no fault accident insurance scheme - the ACC.

Will a Major Earthquake Bankrupt New Zealand

In a word - no - early estimates are of over $2 billion worth of damage in the recent Christchurch earthquake much of which will be paid by either the EQC or commercial insurers. However both the EQC and all New Zealand insurers reinsure their risks- basically they sell their insurances overseas to avoid being bankrupted by just such an event.

In addition EQC has a significant disaster fund - partly invested overseas and which also funds research into disaster prediction and mitigation.